By Karl Stark, The Philadelphia Inquirer, 215-854-5363 kstark@phillynews.com
This is a companion to "Tools for covering hospitals: Financial documents" by Karl Stark and "How to cover your local hospital" by Charles Ornstein.
1) Call the rating agencies ASAP (Moody's, S&P, Fitch) and request the most recent rating reports. Phone numbers are here. Call the analysts and ask what they've heard (only works for nonprofit hospitals).
2) Ask the hospital for its most recent audited financial statement and those of the past two or three years. Get complete copies, not the smaller version they sometimes trot out for the public. The newest one may list reductions in the foot notes (990s are at least a year and a half out of date). The audited financials will give you a long-range view of the hospital's profitability. If they argue with you, point out that hospitals typically share these documents with bondholders, banks, government agencies and sometimes suppliers. How can they not give it to reporters? Then find a good academic expert to review these financial documents.
3) Get a copy of the hospital's most recent bond prospectus; this may reference financial problems (see site above on where to get them). A bond prospectus is a document that hospitals put out when they are selling bonds. It shows all the risks in repaying the hospital's bonds. It also will show their competitive situation and hold lots of clues to their financial position (only works for nonprofit hospitals).
4) Sometimes the state will require employers to file a layoff notice. Check the appropriate state agency.
5) Go to the state unemployment office nearest the hospital and ask if anyone from the hospital has been let go; they may go there to register for unemployment checks.
6) Sometimes the local town where the hospital is located will have a wage tax or a head tax and may list employees. Hospitals tend to be among the largest employers, and the municipal folks may have noticed a drop in employment, if one occurred.
7) Check the liens, law suits and UCC filings in the appropriate county courthouse. People who are owed money by the hospital may be found here. You can do a lot of this through LexisNexis and other services.
8) Consult human sources within the hospital:
• Check the medical staff president, nurses, any union representatives, community doctors who refer lots of patients to the hospital;
• Look for executives who have left in the last few months;
• Ask the surgeons, who often feel in a position to say whatever they want;
• Get the highest paid employees from the most recent 990 and call them;
• Call the biggest philanthropists who give to the hospital (hint: their names are probably on the auditorium or on the wall in the lobby. Just calling these folks may rouse the CEO to talk to you);
• Check the board of directors; show up at their work places, don't just call.
9) Check with employment firms that provide workers to the hospital. These range from temporary nurse agencies to executive recruiters. The 990 may provide hints of which of these firms works with this hospital.
NOTE: About 60 percent of a hospital's budget goes to people, so layoffs are likely when there's a big loss. Cuts often occur in nursing, housekeeping, food service, and security. Cuts to nursing are the most serious because that could impact quality of care.
